A 'Back-Door' public option?

By Clarice Feldman

So much was flung into the Senate Bill that complete analysis has never been made, but a review of it suggests for those who employ more than 50 employees, the Senate has written in a back door public option.

It's a bit complicated but go to the Bill and follow the bouncing ball with me,please.

If even one of the employees of a firm defined as a "large employer"takes a government insurance subsidy despite the fact that the employer provides insurance for all his employees, the employer will have to pay a fine of $750 per employee.

Here is it H.R. 3590 (the Senate ill) provides in Sec 1513 that the Internal Revenue Code shall be amended to include Sec 4980H (c) and that provision is the one at hand.

c) Large Employers Offering Coverage With Employees Who Qualify for Premium Tax Credits or Cost-sharing Reductions-
`(1) IN GENERAL- If--
`(A) an applicable large employer offers to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (as defined in section 5000A(f)(2)) for any month, and
`(B) 1 or more full-time employees of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee,
then there is hereby imposed on the employer an assessable payment equal to the product of the number of full-time employees of the applicable large employer described in subparagraph (B) for such month and 400 percent of the applicable payment amount.
`(2) OVERALL LIMITATION- The aggregate amount of tax determined under paragraph (1) with respect to all employees of an applicable large employer for any month shall not exceed the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.
`(d) Definitions and Special Rules- For purposes of this section--
`(1) APPLICABLE PAYMENT AMOUNT- The term `applicable payment amount' means, with respect to any month, 1/12 of $750.
`(2) APPLICABLE LARGE EMPLOYER-

(A) IN GENERAL- The term `applicable large employer' means, with respect to a calendar year, an employer who employed an average of at least 50 full-time employees on business days during the preceding calendar year.I believe employees are eligible for subsidies if they earn less than $88,000 per year (though I haven't double checked that). In essense this will force most employers to drop their insurance because the already high cost of insurance will be substantially increased by a $750 fine for every single employee.

I cannot find section 1411 and don't know if in the rush to cobble something together that was renumbered or accidentally dropped, but my recollection is that the figue for eligibility for subsidized insurance coverage was an annual income of $88,000 per year.

It is hard to imagine a large employer without a single employee eligible for the subsidy; and it is equally hard to imagine why any employer would care to pay for both employee health insurance AND a fine for every employee in the case even one opts for the subsidy.

UPDATE

Clarice clarifies:

If an employer is over the minimum, and still he has to pay this large fine..say 30 of the 100 employees opt for the subsidy and the fine is $3k per--the employer will just drop his insurance coverage by $90k for the others to cover that.

Excuse me, let me correct that -- if an employer is over the minimum, and still he has to pay this large fine..say 30 of the 100 employees opt for the subsidy and the fine is $3k per--the employer will just drop his insurance coverage by $90k for the others to cover that.

Clarice Feldman